Q&A: Insurers don't want to share savings from reduced utilization
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • CMS finalizes drug transparency, pharmacy quality rules
      More than 4M patients had data exposed in December-reported breaches
      MD Anderson wins appeal over $4.3M HIPAA penalty
      CMS approves rule forcing insurers to ease prior authorization
    • Biden unveils $1.9T plan to stem virus and steady economy
      Nursing home staff COVID-19 vaccination: A work in progress
      California hospitals prepare ethical protocol to prioritize lifesaving care
      Expanded vaccine rollout in U.S. spawns a new set of problems
    • Trenda Ray
      Q&A: Arkansas nursing leader looking for creative staffing solutions as COVID cases surge
      The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      Cook Lydia 4x6_i.jpg
      Northeast Ohio health systems increase community benefit values in 2019
      Vaccine rollout hits snag as health workers balk at shots
    • CMS approves rule forcing insurers to ease prior authorization
      COVID-19 still a big uncertainty for insurers in 2021
      Health insurers' outlook boosted after Dems' Georgia win
      humana_i.jpg
      Humana supports Ohio not-for-profits with $500,000
    • CMS approves rule forcing insurers to ease prior authorization
      Verma: CMS tried to ‘infuse' free-market competition across healthcare during Trump era
      CMS axes MFAR rule for good
    • Operation Warp Speed to bump up McKesson's stock price
      Reporter's notebook: J.P. Morgan's 2021 health conference
      Hospitals, nursing homes get more time to file cost reports
      Hospitals' 2020 fundraising on pace to top 2019
    • 5 things to know about Google's $2.1B Fitbit acquisition
      Providence bets on machine-learning, consolidating data centers
      Mental health treatment was most common telehealth service during COVID
      Broad, Verily take Terra bioinformatics platform to Microsoft Azure cloud
    • Chance of COVID-19 triage care looms over Arizona hospitals
      U.S. ramps up vaccinations to get doses to more Americans
      367146427.jpg
      Should businesses mandate that staff get the COVID vaccine?
      Smartphone
      'No mobile phone' phobia on the rise
    • Tower Health's finance chief resigning after years of steep losses
      AHRQ director Gopal Khanna resigns in response to Capitol riot
      Brigham president stepping down after Moderna controversy
      Dr. Kenneth Davis
      Mount Sinai CEO offers lessons from one of the nation's first COVID recovery clinics
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
      Yale New Haven's COVID-19 nurse-staffing model has long-term benefits
    • Modern Healthcare InDepth: Breaking the bias that impedes better healthcare
      Videos: Healthcare industry executives describe their encounters with racism
      Michellene Davis
      Healthcare leadership lacks the racial diversity needed to reduce health disparities
      Dr. James Hildreth
      How medical education can help fight racism
      Quotes from rebadged employees
      Outsourcing IT, revenue cycle takes toll on internal culture
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      self service station
      COVID-19 pushes patient expectations toward self-service
      Targeting high-risk cancer patients with genetics
      A nurse holds up a phone with a message to a family member saying surgery has started.
      Texting, tablets help hospitals keep family updated on patient care
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Highmark Health inks six-year cloud, tech deal with Google
      Study: 1 in 5 patients report discrimination when getting healthcare
      HHS proposes changing HIPAA privacy rules
      Android health records app launches at 230 health systems
    • California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
      Healthcare was the hardest hit by supply shortages across all U.S. industries
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      New care model helps primary-care practices treat obesity
      How hospitals are building on COVID-19 telehealth momentum
      Researchers: Hospital price variation exacerbates health inequities
    • MedPAC votes to boost hospital payments, freeze or cut other providers
      Most Next Gen ACOs achieved bonuses in 2019
      Congress recalibrates Medicare Physician Fee Schedule after lobbying
      CMS approves rule to encourage value-based drug pricing
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
      Dr. Bruce Siegel
      Why taking a hospital not-for-profit was Dr. Bruce Siegel’s boldest move
    • Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
      Mark C. Clement and David Cook
      We all need to 'do something' to fight inequities and get healthcare right, for every patient, every time
    • Healing healthcare: some ideas for triage by the new Congress, administration
      Dr. Sachin H. Jain
      Medicare for All? The better route to universal coverage would be Medicare Advantage for All
      Connectivity: a social determinant of health that can exacerbate all the others
      Taking my shot at building trust
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - Health Care Hall of Fame
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Social Determinants of Health Symposium
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala (2022)
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
      Next Up Podcast: COVID-19, social determinants highlight health inequities — what next?
      Ceci Connolly
      Next Up Podcast: How to navigate the murky post-election waters
      Next Up Podcast: Saving Rural Health
    • An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
      doctor burnout
      Beyond the Byline: How healthcare supply chain struggles contribute to employee burnout
      Beyond the Byline: Covering race and diversity in the healthcare industry
      Beyond the Byline: How telehealth utilization has impacted investor-owned company earnings
    • Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      The Check Up: Dr. Kenneth Davis
      The Check Up: Dr. Kenneth Davis of Mount Sinai Health System
      The Check Up: Dr. Thomas McGinn
      The Check Up: Dr. Thomas McGinn of CommonSpirit Health
      The Check Up: Mark Ganz
      The Check Up: Mark Ganz of Cambia Health Solutions
    • Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
March 28, 2015 01:00 AM

Q&A: Insurers don't want to share savings from reduced utilization

Modern Healthcare
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Dan Wolterman

    Since 2002, Dan Wolterman has served as president and CEO of Houston-based Memorial Hermann Healthcare System, Texas' largest not-for-profit health system, which provides care in southeast Texas through 16 hospitals and has $4.2 billion in net operating revenue. Wolterman has been on Modern Healthcare's 100 Most Influential People in Healthcare list six times, including the past three years. Modern Healthcare reporter Melanie Evans recently spoke with Wolterman about his system's experience with accountable care, tensions with insurers over starting a health insurance arm, and Memorial Hermann's shift to outpatient care. This is an edited transcript.

    Modern Healthcare: What contingency plans have you made if the U.S. Supreme Court decides that Obamacare premium subsidies will no longer be available through the federal insurance exchange that Texas is using?

    Dan Wolterman: Texas leads the U.S. in the numbers of uninsured in our population. It is a shame that our state political leaders have not listened to the business and provider communities to expand Medicaid. But as a result of that, this future ruling by our Supreme Court will not hurt providers in Texas as much as in other states. We have only had a fraction of our population enrolled in subsidized health plans on the federal exchange. (Editor's note: About 1.2 million Texans enrolled for 2015.) In Houston, we count about 250,000 enrollees out of a population of about 7 million. So it's a pretty minimal impact on our system, and not a lot of planning has been done.

    MH: What has been your system's experience in the Medicare Shared Savings ACO program?

    Wolterman: The Affordable Care Act gave us the opportunity to take our clinically integrated concept that we have been after since 2000 with our physician independent practice association. That IPA has approximately 3,000 physicians from across the Houston region. We were able to take that IPA, combine it with our system's resources and form our ACO. That was a wonderful success. Medicare originally assigned us 24,000 Medicare lives in the Houston community, and we were able to demonstrate savings of approximately $58 million, the top performance in the U.S. Not only were the savings strong, but all the quality metrics were met and were in the upper 10% of the country in quality. We were very pleased. Today, we are up to 38,000 lives in that program.

    MH: You also operate a commercial ACO with Aetna that, unlike the Medicare ACO, is a narrow network. What has that meant for your ability to manage cost and quality?

    Wolterman: There is not much difference between how we run our narrow network under the Aetna ACO and how we operate our Medicare ACO. We run it all through our clinically integrated physicians in the IPA. All those physicians have committed to practice evidence-based care. They meet monthly by specialty across Houston to determine the evidence, the protocols they are going to follow, and what physician preference items they are going to use. They determine the drug formularies. Whether it is a narrow network or a broader network for Medicare, it's the same physicians practicing medicine the same way.

    MH: Do you expect to see Memorial Hermann take on additional financial risk under contracts?

    Wolterman: We would love to take risk. The problem is this: Very efficient providers like Memorial Hermann with their doctors have been able to reduce inpatient admissions, hospital-acquired conditions and infections, and ancillary testing like MRIs and CT scans. With our total cost of care so low, we would love to go and take a risk contract. We would be much better off. We saved $58 million in the Medicare ACO. We received 50% of that from Medicare to divvy up between the physicians in our system. If they were all under a risk contract, we would have received all $58 million of that. But carriers simply do not wish to share it with us. They say, “We love how you all are providing care, the quality is outstanding and the cost controls are wonderful. You just keep doing what you're doing. You're making us lots of money. We'll stay under fee-for-service.”

    So we felt that we needed to be more aggressive. A couple of years ago, we decided to start our own insurance company. It is a fledgling company today, but we are off the ground and we are now in the commercial and Medicare Advantage programs, and hope that will start the ball moving to where we can take risk.

    Web extra

    Listen to the full interview with Dan Wolterman.

    MH: How have insurance companies responded?

    Wolterman: At this point, they are not happy with Memorial Hermann being in the insurance business. But generally, they're fine because we have been very good to work with. If they're willing to work with our physicians and our system through an ACO, we are happy to do that with them. We try to be open to everybody, as long as it is a fair two-way discussion.

    MH: What has been your experience with the shift to more care being delivered outside the hospital?

    Wolterman: We saw that coming years ago. In 2005, we decided to take a couple of hundred million dollars of strategic capital out of the traditional hospital space and use it to set up an organization focused on ambulatory business that had nothing to do with the hospitals. You drive right up to the front door, go in and get your test and you're out.

    Today, we have over 220 sites of care in Houston. Twelve of those sites are our traditional hospitals, but the rest are these ambulatory services geared toward quick in, quick out, lower cost, and they're run separately from the hospital. We decided in 2005 that no hospital executive could apply to work in this company. We wanted entrepreneurs who were more open to a different way of providing healthcare services. That has been very, very successful. So successful that, of our $4.2 billion of net operating revenue today, almost 50% of that comes from our ambulatory business.

    MH: Why has your system seen inpatient admissions rise, which is different from what has been happening across the country?

    Wolterman: Inpatient admissions have risen phenomenally in our system. A lot of it is driven by our strategies, and our moving the system more toward a retail focus and restructuring to be more service-line driven. Those service lines have been very attractive to physicians and patients, and have allowed us to have great centers of excellence. That has driven more volume to us. But it also is helpful to be in a wonderful community like Houston that has experienced population growth of a million people in the past eight years. It is predicted to grow by another million in the next eight or nine years.

    That population is obviously going to have healthcare needs.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
    The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
    Q&A: Arkansas nursing leader looking for creative staffing solutions as COVID cases surge
    Q&A: Arkansas nursing leader looking for creative staffing solutions as COVID cases surge
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
        • Social Determinants of Health Symposium
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala (2022)
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing